ECC approves guarantee of Rs 659.6 billion to settle debts of Power Holding Company

• The HRIS phase-out is phased in, dependent on the FY26 review.
• SBP caution prevails. no HRIS abrupt stop.
• The Mari gas move stabilizes the availability and pricing of fertilizers.

ISLAMABAD: The Economic Coordination Committee (ECC) of the Cabinet has approved a government guarantee of Rs 659.6 billion to settle the debt of Power Holding Limited (PHL) and phase out subsidies under the Home Remittance Incentive Scheme (HRIS) by 2027. The News was mentioned.

The government guarantee of Rs 659.646 billion will be issued to PHL to cover loans and payments to IPPs as part of the Rs 1.225 trillion debt financing round. The committee said the measures are aimed at ensuring the financial viability of the energy sector, speeding up the settlement of outstanding debts and reducing costs for consumers.

The Council was informed that the central bank had called for the phasing out of incentives for the remittance regime.

The Finance Ministry had allocated Rs 100 billion for this as subsidy in the current financial year. The State Bank of Pakistan (SBP) has advised against an abrupt halt to HRIS due to the risk of major disruption in remittances. Instead, a phased rationalization plan should be put in place for the 26th year results and any revisions proposed thereafter.

In the normal scenario, where remittance dynamics are not severely affected (above 10%) due to the recent revisions in HRIS, the government may consider phasing out the schemes beyond year 27, subject to assessment. The ECC met under the chairmanship of Senator Muhammad Aurangzeb, Federal Minister for Finance and Revenue, in the Finance Department.

On the proposal of the Petroleum Department, the ECC approved the allocation and pricing of natural gas from Mari Fields to fertilizer plants to ensure adequate and affordable supply of fertilizers on a structural basis.

The ECC prepared a summary submitted by the Department of Power on tariff rationalization and payment adjustments for Nuclear Power Plants (NPPs), State Power Plants (GPPs), OGDCL and SNGPL.

The committee approved the agreed framework among stakeholders to settle outstanding debts and waive specific financial requirements to support fiscal balance and tariff rationalization.

The ECC also considered and approved another summary from the Power Division to issue a government guarantee of Rs 659.646 billion for debt financing of Rs 1.225 trillion.

In another decision, the committee considered and approved a summary from the Finance Division to phase out HRIS. The ECC has adopted a data-driven phased approach to ensure stability in remittance inflows and avoid any sudden stop that could adversely affect the economy.

It was further decided that the Government may consider completing the phase-out process beyond the 27th year, subject to a review of the remittance performance and the results of the 26th year reviews.

Among the administrative decisions, the ECC approved over Rs 960 million for the Home Ministry and sought a report from the CDA on the future of disabled personnel. The briefing by the Ministry of Maritime Affairs on the use of PIBT was postponed.